Basically, everytime you pay the money for a software, you are paying for the liscence of installing it on a certain number of computers. For the amount of money you pay for XP (like 100 or something), you are allowed one installation, legally, on a computer. Any number beyond that on that CD will require another liscence be bought from Microsoft. Of course, it's possible, but it's definately illegitament and illegal.
Hope that helps,
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University of Michigan President Mary Sue Coleman